Should You Buy Zomato and Paytm?

Hello viewers. Welcome to the Fast Profits Daily. Myself, Brijesh Bhatia.

Well, the unicorns which have corrected around 70% be it Zomato, be it Paytm, have seen a sharp recovery on an intraday basis. We have seen Zomato back to back 10% plus gains with momentum. In Paytm we've seen some intraday momentum.

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Have they made the bottom? Are the at an excellent or at an opportunity price to grab for an investor or as a trader?

Let me throw a couple of uniforms chart where I still believe that the bottom is yet to be in place. And this could be a probably an automatic reaction momentum or the bull trap as per the Wykoff theory.

 

Let's start with the first chart, which is Paytm or the One 97 Communications. So the chart, if you look at the screen over here, look at the left side.

It started falling since the listing from right around 1,800-1,900 levels back to the first selling pressure around 1,050-1,080 which could be termed as preliminary selling.

The second leg of rally was again a fast and furious momentum to the downside, being a selling climate. Why am I terming it as a selling event? Because if you look at the volumes on the downside, the volumes are very, very high. And when the selling pressure is with huge volumes, they tend to be on the selling climax.

Then we saw a bounce back, prices resisting at the gap, which could be termed as an automatic reaction as per the theory, we hit a new low on Paytm. It went back towards 500 levels, 520-530 levels, and came back very, very strong. If you look at the volumes when the previous low the selling climax as has been mentioned, the volumes were very, very high.

But at the same time if you look at where the new lows were formed, the volumes were not that strong in the come back, and the rally which was seen right towards 600+ levels, 640-650 levels, seem to be the people who have bought around 530, 550, and 570, are exiting because if you look at the one tick volume bar, it seems to be an exit because this falloff selling has been very, very crucial again.

So as per the Wykoff theory and the dotted line, which is the probable move which I am expecting to be as per the theory, where this is into the secondary test and post this secondary test, to the spring, prices might consolidate in a range. It might go 20% higher fall back to 10-15% down side. And once the spring happens, then we could term it as a bottom.

But as of now I still think prices are post-secondary test phase and spring is yet to be made. So this bounce, probably it might be an exit what the longs who have taken it, and we might see a new low in the Paytm before we head higher.

Again, there could be an update from me where the price action might form a bottom. But as of now, I still believe that is not an excellent opportunity to look at the technical structure as per the Wykoff theory and buy Paytm.

 

The second unicorn which was again the flavour of the day yesterday, gaining on 13-14%, looking at a structure now, as per the Wykoff theory, again right from around 165-170 levels back to the 90-91 level, I term it as a selling climax because it was a slow and steady momentum on the downside.

The second leg of the rally, where the selling was very fast and furious with the volumes I would term it as the selling climax over here.

Again, this could be the automatic reaction, or a trap where it could head probably around 85-90 levels on the positive momentum over here because if you look at the previous highs, it was somewhere around 91-92, it might get re-tested and that could be the bull trap happening.

Still, a secondary test is a pending, as per the theory and probably the secondary test could be at the lower levels near the previous week's selling climax lows. This could be the bull trap.

So I would suggest still a bottom is not in place. And if you look at the dotted line which I have marked of the probable moves as per the Wykoff theory, spring is yet to be made, and it could be into the secondary test phase. Prices might go into consolidation for a few months now, before we hit a spring at the lower levels and form a major bottom.

As of now, I still think that Paytm and Zomato both are an avoid into the technical structure as per the Wykoff theory. It can't be commented that the bottom is in place or it is a good level to accumulate, but in case the technical structure indicates that still it might go into the consolation with negative bias looking at the momentum.

Spring is not yet formed which is very sceptical for me as per the Wykoff theory. Till the spring is formed, I am not sure that the bottom is in place. And if the spring happens, the momentum happens with the huge volumes and a V-shaped recovery, that could be the levels where I court think that the bottom could be in place.

But as per the theory Paytm is into the post-secondary test phase, spring is yet to be made. And Zomato, we are in the secondary test phase. Spring is pending. So as of now I still think they might consolidate before heading higher and for me that could be, as an investor, I would look for buying a opportunity as per the Wykoff theory.

Signing off, Brijesh Bhatia.